Condensed Consolidated Balance Sheets - Unaudited (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 302 | $ 225 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 39,980,396 | 39,880,054 |
Common stock, shares outstanding (in shares) | 39,106,398 | 39,027,572 |
Treasury stock, shares (in shares) | 873,998 | 852,482 |
Condensed Consolidated Statements of Comprehensive Loss - Unaudited - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (3,725) | $ (2,220) | $ (8,456) | $ (7,179) |
Other comprehensive loss: | ||||
Changes in foreign currency translation adjustment | (136) | (66) | (151) | (241) |
Comprehensive loss | $ (3,861) | $ (2,286) | $ (8,607) | $ (7,420) |
The Company and Summary of Significant Accounting Principles |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Company and Summary of Significant Accounting Principles | The Company and Summary of Significant Accounting Principles Synacor, Inc., together with its consolidated subsidiaries (collectively, the “Company” or “Synacor”), is a digital technology company that provides email and collaboration software, cloud-based identity management platforms, managed web and mobile portals, and advertising solutions. The Company’s customers include communications providers, media companies, government entities and enterprises. Synacor is a trusted partner for enterprise software platforms and monetization solutions that Synacor delivers through public and private cloud software-as-a-service, software licensing, and professional services. Synacor enables clients to deepen their engagement with their consumers and users. Basis of Presentation — The interim unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the interim unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position for the periods presented. These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full fiscal year or for any subsequent period. The accompanying condensed consolidated balance sheet as of December 31, 2018 was derived from the audited financial statements as of that date, but does not include all the information and footnotes required by U.S. GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. During the first quarter of 2019, the Company made a change to its segment reporting structure which resulted in two segments 1) Software & Services and 2) Portal & Advertising. As a result, certain prior year amounts have been restated to conform to current year’s presentation. Historical Amounts in Note 2 – Revenue from Contracts with Customers, Note 4 - Goodwill and Intangible Assets and Note 7 – Segment Information have been restated to reflect these changes in reportable segments. Additionally, the Company has reclassified certain costs and expenses in the consolidated statement of operations for the three and nine months ended September 30, 2018, amounting to $0.1 million and $0.7 million respectively, from technology and development to cost of revenue to conform to the current period presentation. These reclassifications had no effect on previously reported total costs and operating expenses and net loss. Historical Amounts in Note 1 – The Company and Summary of Significant Accounting Principles have been restated to reflect this reclassification. Accounting Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, actual results may differ from estimated amounts. Concentrations of Risk — As of September 30, 2019 and December 31, 2018, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:
For the three and nine months ended September 30, 2019 and 2018, the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows:
For the three and nine months ended September 30, 2019 and 2018, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue:
Recent Accounting Pronouncements — Not Yet Adopted In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2018-15, Customer’s Accounting For Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which aligns the requirements for capitalizing implementation costs in a cloud computing arrangement with the requirements for capitalizing implementation costs incurred for an internal-use software license. Adoption of this guidance is required for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years and early adoption is permitted. Entities are permitted to choose to adopt the new guidance (1) prospectively for eligible costs incurred on or after the date this guidance is first applied or (2) retrospectively. The Company is evaluating the impact of this new accounting standard on its financial statements. Recently Adopted On January 1, 2019 the Company adopted ASU No. 2016-2, Leases (Topic 842) (ASU 2016-2), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provides an additional, optional transition method with which to adopt the new leases standard. This additional transition method allows for a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, rather than in the earliest period presented in the financial statements, as originally required by ASU 2016-2. The Company adopted the standard using the additional transition method introduced by ASU 2018-11. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. For information regarding the impact of Topic 842 adoption, see Significant Accounting Policies - Leases and Note 3 — Leases. The Company considers the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable, or had or are expected to have minimal impact on the Company’s financial statements and related disclosures. Significant Accounting Policies – Leases On January 1, 2019, the Company adopted Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating prior periods. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. The Company elected the package of practical expedients permitted under the transition guidance, which allowed for the carryforward of historical lease classification, on whether a contract was or contains a lease, and of the assessment of initial direct costs for any leases that existed prior to January 1, 2019. The Company also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term. On January 1, 2019, the Company recognized additional ROU assets of $10.2 million, with corresponding liabilities of $10.4 million on the condensed consolidated balance sheet. The difference between the lease liability and the ROU asset represents the existing deferred rent liabilities balances before adoption, resulting from historical straight-lining of rent expense, which was reclassified upon adoption to reduce the measurement of the initial ROU asset. This was in addition to the $3.4 million of finance lease ROU assets previously reported in property and equipment, net as capital leases. The adoption did not impact our beginning stockholders’ equity, and did not have a material impact on the condensed consolidated statement of operations and statement of cash flows for the three and nine months ended September 30, 2019. Under Topic 842, the Company determines if an arrangement is a lease and classifies that lease as either an operating or finance lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, only payments that are fixed and determinable at the time of commencement are considered. As many of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is a hypothetical rate based on factors including the Company’s credit rating. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the options will be exercised. Operating leases are included in operating lease right-of-use assets, and current and long-term operating lease liabilities on our condensed consolidated balance sheets. Finance leases are included in property and equipment-net, and on the current and long-term portion of debt and finance leases on our condensed consolidated balance sheets. Significant Accounting Policies – Goodwill and Segments During the first quarter of 2019, the Company made changes to its segment reporting structure that resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising. Previously the Company concluded that it had one reportable segment. This change resulted in two reporting units for the purpose of impairment analysis for goodwill. The Company evaluates goodwill for impairment for each of its reporting units at least annually, during the fourth quarter, and whenever events occur or circumstances change, such as changes in the business climate, poor indicators of operating performance or the sale or disposition of a significant portion of a reporting unit. The Company is required to evaluate goodwill for impairment when there is a change in reporting units. Companies may perform a qualitative assessment as the initial step in the annual goodwill impairment testing process for all or selected reporting units. Companies are also allowed to bypass the qualitative analysis and perform a quantitative analysis if desired. Economic uncertainties and the length of time from the calculation of a baseline fair value are factors that we consider in determining whether to perform a quantitative test. When the Company evaluates the potential for goodwill impairment using a qualitative assessment, the Company considers factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative two-step impairment test. Quantitative testing first requires a comparison of the fair value of each reporting unit to its carrying value. The fair value of each reporting unit is determined using a combination of an income approach and a market approach. If the carrying value of the reporting unit exceeds its fair value, goodwill is considered impaired and any loss must be measured. The income approach uses a discounted cash flow method to estimate the fair value of our reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating margins and cash flows, the terminal growth rate and the discount rate. The Company projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments and operational strategies typically over a five-year period. The market approach determines fair value based on available market pricing for comparable assets. Valuation multiples were calculated utilizing actual transaction prices and revenue or EBITDA data from target companies deemed similar to the reporting unit. Valuation multiples were then applied to certain operating statistics such as revenue or EBITDA, and an estimated control premium was applied. If the carrying amount of the reporting unit exceeds the reporting unit’s fair value as determined using the two valuation methodologies described above, an impairment loss is recognized in the amount by which the carrying value of the reporting unit exceeds the fair value of the reporting unit. The determination of our assumptions is subjective and requires significant estimates. Changes in these estimates and assumptions could materially affect the results of our reviews for impairment of goodwill. Impairment Analysis As stated above during the first quarter of 2019, the Company made changes to our segment reporting structure that resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising. This change also resulted in two reporting units used to review goodwill for impairment. The Company performed a quantitative test for both reporting units and both reporting units fair value exceeded carrying value. In accordance with ASC 350-20-35, the Company assesses goodwill of an entity (or a reporting unit) for impairment if an event occurs or circumstances change that indicate that the fair value of the entity (or the reporting unit) may be below its carrying amount (a triggering event). As a result of the such assessment of relevant events and circumstances, the Company performed a quantitative test for the Portal & Advertising segment as of June 30, 2019 for which the fair value exceeded the carrying value. As such, no impairment charges were recorded for the three and nine months ended September 30, 2019.
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Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers The Company generates all of its revenue from contracts with customers. Many of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices of software licenses are typically estimated using the residual approach. Standalone selling prices of services are typically estimated based on observable transactions when these services are sold on a standalone basis. The Company usually expects payment within 30 to 90 days from the invoice date (fulfillment of performance obligations or per contract terms). None of the Company’s contracts as of September 30, 2019 contained a significant financing component. Differences between the amount of revenue recognized and the amount invoiced are recognized as deferred revenue. Disaggregation of revenue The following table provides information about disaggregated revenue for the three and nine months ended September 30, 2019 and 2018 by the timing of revenue recognition, and includes a reconciliation of the disaggregated revenue by reportable segment (in thousands):
Revenue disaggregated by geography, based on the billing address of our customer, consists of the following (in thousands):
Remaining Performance Obligations Deferred revenue is recorded when cash payments are received or due in advance of revenue recognition from software licenses, professional services, and maintenance agreements. The timing of revenue recognition may differ from the timing of billings to customers. The changes in deferred revenue, inclusive of both current and long-term, are as follows (in thousands):
The majority of the deferred revenue balance above relates to the maintenance and support contracts for the Company's email software licenses. These are recognized straight-line over the life of the contract, with the majority of the balance being recognized within the next twelve months. Practical Expedients The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | LeasesThe Company enters into various noncancelable operating lease agreements for certain of our offices, data centers, colocations and network equipment. The Company’s leases have original lease periods expiring between 2019 and 2024. Many leases include one or more options to renew. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The Company’s variable lease payments are immaterial and its lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating lease costs are included in cost of revenue and general and administrative costs in the Company’s condensed consolidated statements of operations. Finance lease amortization costs are included in depreciation and amortization, and finance lease interest costs are included in interest expense in the Company’s condensed consolidated statements of operations. The components of lease costs, lease term and discount rate are as follows (lease cost in thousands):
The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2019 (in thousands):
As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and under Accounting Standard Codification Topic 840, the predecessor to Topic 842, the following is a summary of annual future minimum lease and rental commitments under noncancelable operating leases as of December 31, 2018 (in thousands):
Supplemental cash flow information related to leases are as follows (in thousands):
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Leases | LeasesThe Company enters into various noncancelable operating lease agreements for certain of our offices, data centers, colocations and network equipment. The Company’s leases have original lease periods expiring between 2019 and 2024. Many leases include one or more options to renew. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The Company’s variable lease payments are immaterial and its lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating lease costs are included in cost of revenue and general and administrative costs in the Company’s condensed consolidated statements of operations. Finance lease amortization costs are included in depreciation and amortization, and finance lease interest costs are included in interest expense in the Company’s condensed consolidated statements of operations. The components of lease costs, lease term and discount rate are as follows (lease cost in thousands):
The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2019 (in thousands):
As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and under Accounting Standard Codification Topic 840, the predecessor to Topic 842, the following is a summary of annual future minimum lease and rental commitments under noncancelable operating leases as of December 31, 2018 (in thousands):
Supplemental cash flow information related to leases are as follows (in thousands):
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Goodwill and Intangible Assets |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets As described in Note 1 - The Company and Summary of Significant Accounting Principles, the Company changed its reportable segments during the first quarter of 2019. Goodwill was assigned to the new reportable segments on the relative fair value basis. The changes in the carrying amount of goodwill for the nine months ended September 30, 2019 are as follows (in thousands):
As described in Note 1 - The Company and Summary of Significant Accounting Principles, there were no goodwill impairment losses recorded during the three and nine months ending September 30, 2019. The Company has no accumulated impairment losses. Intangible assets consisted of the following (in thousands):
Amortization of intangible assets totaled $0.5 million for the three months ended September 30, 2019 and 2018, and $1.6 million for the nine months ended September 30, 2019 and 2018. Based on acquired intangible assets recorded at September 30, 2019, amortization is expected to be $0.5 million for the remainder of 2019, $2.0 million in 2020, $1.4 million in 2021, $1.3 million in 2022, and $1.3 million in 2023.
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Property and Equipment - Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment - Net | Property and Equipment – Net Property and equipment, net consisted of the following (in thousands):
Depreciation expense totaled $2.1 million and $1.9 million for the three months ended September 30, 2019 and 2018, respectively. Depreciation expense totaled $6.5 million and $5.7 million for the nine months ended September 30, 2019 and 2018, respectively. Property and equipment includes computer equipment and software held under finance leases of $11.5 million and $8.4 million as of September 30, 2019 and December 31, 2018, respectively. Accumulated depreciation of computer equipment and software held under finance leases amounted to $7.5 million as of September 30, 2019. Accumulated depreciation of computer equipment and software held under capital leases amounted to $5.0 million as of December 31, 2018. For the three months ended September 30, 2019 and 2018, respectively, the Company capitalized a total of $0.4 million and $0.9 million of costs that occurred during the application development phase, related to the development of internal-use software. The Company capitalized a total of $0.4 million and $0.2 million of costs related to the development of software for sale or license for the three months ended September 30, 2019 and 2018, respectively, that occurred after technological feasibility had been achieved. For the nine months ended September 30, 2019 and 2018, respectively, the Company capitalized a total of $1.9 million and $2.8 million of costs that occurred during the application development phase, related to the development of internal-use software. The Company capitalized a total of $1.1 million and $1.0 million of costs related to the development of software for sale or license for the nine months ended September 30, 2019 and 2018, respectively, that occurred after technological feasibility had been achieved. Amortization of software capitalized for internal use was $1.0 million for the three months ended September 30, 2019 and 2018, and $3.5 million for the nine months ended September 30, 2019 and $3.2 million for the nine months ended September 30, 2018, and included in depreciation and amortization in the consolidated statement of operations. Amortization of software for sale or license was $0.4 million for the three months and $0.9 million for the nine months ended September 30, 2019. Amortization of software for sale or license was not material for the three and nine months ended September 30, 2018. There were no impairment charges during the three and nine months ended September 30, 2018. During the three months ended September 30, 2019, there was a loss of a major portal customer which caused the Company to assess the valuation of certain long-lived assets. The Company utilizes the discounted cash flow to determine the fair value of the assets. Impairment charges related to the following assets were included in general and administrative expenses in the consolidated statement of operations for the three and nine months ended September 30, 2019 as follows (in thousands):
The following table sets forth long-lived tangible assets by geographic area (in thousands):
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Accrued Expenses and Other Current Liabilities |
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Accounts Payable and Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands):
Included in accrued compensation are accrued severance costs. In 2018, the Company initiated a cost reduction program to drive overall efficiency while adding capacity and streamlining the organization. All cash payments during the three and nine month period ending September 30, 2019 relate to the 2018 plan. In the third quarter of 2019, the Company initiated a similar cost reduction program in order to further streamline the organization after the loss of a major portal customer. These actions resulted in workforce reductions, office consolidations and consolidating operations. All expense charged in the three and nine month period ending September 30, 2019 related to the 2019 plan. The below table summarizes the activity in the accrued severance account (in thousands).
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information During the first quarter of 2019, the Company made changes to its segment reporting structure that resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising. All historical amounts have been restated to reflect this change in reportable segments. Software & Services generates revenue by providing cloud-based identity management solutions and email/collaboration products. Portal & Advertising generates managed portal fees and advertising revenue from its traffic on its Managed Portals and other advertising solutions it provides for publishers. The Company’s operations are organized and managed by type of products and services and segment information is reported accordingly. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer. The CODM reviews financial performance and allocates resources by reportable segment. There have been no operating segments aggregated to arrive at the Company’s reportable segments. The accounting policies of each segment are the same as those described in the summary of significant accounting policies, refer to Note 1— Summary of Significant Accounting Policies, for further details. The Company evaluates the performance of its segments and allocates resources to them based on Segment Adjusted EBITDA. Segment Adjusted EBITDA is defined as EBITDA (earnings before interest, income taxes, depreciation and amortization) adjusted for certain non-cash items and other non-recurring income and expenses. Revenue for all operating segments include only transactions with unaffiliated customers and there is no intersegment revenue. The Company does not account for, and does not report to management, its assets or capital expenditures by segment other than goodwill and intangible assets used for impairment analysis purposes. The tables below summarize the financial information for the Company’s reportable segments for the three and nine months ended September 30, 2019 and 2018 (in thousands). The “Corporate Unallocated Expenses” category, as it relates to Segment Adjusted EBITDA, primarily includes corporate overhead costs, such as rent, payroll and related benefit costs and professional services which are not directly attributable to any individual segment.
Notes: (1) Exclusive of depreciation and amortization shown separately on the condensed consolidated statements of operations The following table reconciles total Segment Adjusted EBITDA to Net loss:
* "Certain legal expenses" include legal fees and other related expenses outside the ordinary course of business. ** “Certain professional services fees” includes fees and expenses related to merger and acquisition activities.
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Commitments and Contingencies |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Contract Commitments — The Company is obligated to make minimum payments under various contracts with vendors and other business partners, principally for revenue-share and content arrangements. Contract commitments as of September 30, 2019 are as follows (in thousands):
Litigation — The Company and its Chief Executive Officer and former Chief Financial Officer were named as defendants in a federal securities class action lawsuit filed on April 4, 2018 in the United States District Court for the Southern District of New York. The class includes persons who purchased the Company’s shares between May 4, 2016 and March 15, 2018. The plaintiff alleged that the Company made materially false and misleading statements regarding its contract with AT&T and the timing of revenue to be derived therefrom, and that as a result, class members suffered losses because Synacor shares traded at artificially inflated prices. The plaintiff sought an unspecified amount of damages, as well as interest, attorneys’ fees and legal expenses. The plaintiff filed an amended complaint on August 2, 2018, a second amended complaint on November 2, 2018, and the Company filed a motion to dismiss on December 17, 2018. The plaintiff filed his opposition to the motion to dismiss on January 19, 2019 and the Company filed its reply to plaintiff’s opposition on February 15, 2019. On August 28, 2019, the court granted the Company's motion to dismiss but permitted the plaintiff to seek leave to replead. On October 2, 2019, the plaintiff filed a letter application seeking the court's leave to file a third amended complaint. The Company filed a letter in opposition to the plaintiff's motion on October 21, 2019. The Company disputes these claims and intends to defend them vigorously. The Company cannot yet determine whether it is probable that a loss will be incurred in connection with this complaint, nor can the Company reasonably estimate the potential loss, if any. Legal fees and liabilities related to this lawsuit are covered by D&O insurance after the Company reaches its deductible. In addition, the Company is, from time to time, party to litigation arising in the ordinary course of business. It does not believe that the outcome of these claims will have a material adverse effect on its consolidated financial position, results of operations or cash flows based on the status of proceedings at this time. However, these matters are subject to inherent uncertainties and the Company’s view of these matters may change in the future.
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Stock-based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation The Company has stock-based employee compensation plans for which compensation cost is recognized in its financial statements. The Company is authorized to grant key employees stock-based incentive awards, including options to purchase common stock, stock appreciation rights, RSUs, PSUs or other stock units. The cost is measured at the grant date, based on the fair value of the award, determined using the Black-Scholes option pricing model, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). The following table presents the weighted-average assumptions used to estimate the fair value of options granted during the periods indicated:
Total stock-based compensation expense included in the accompanying condensed consolidated statements of operations for the periods presented, is as follows (in thousands):
Stock Option Activity – A summary of the stock option activity for the nine months ended September 30, 2019 is presented below:
Aggregate intrinsic value represents the difference between the Company’s closing stock price of its common stock and the exercise price of outstanding, in-the-money options. The Company’s closing stock price as reported on the Nasdaq Global Market as of September 30, 2019 was $1.40 per share. The total intrinsic value of options exercised for the three and nine months ended September 30, 2019 was minimal. The weighted average fair value of options granted during the nine months ended September 30, 2019 amounted to $0.98 per option share. As of September 30, 2019, the unrecognized compensation cost related to options granted, for which vesting is probable, and adjusted for estimated forfeitures, was approximately $1.8 million. This cost is expected to be recognized over a weighted-average remaining period of 2.25 years. RSU Activity —A summary of RSU activity for the nine months ended September 30, 2019 is as follows:
As of September 30, 2019, total unrecognized compensation cost, adjusted for estimated forfeitures, related to RSUs was $0.9 million. This cost is expected to be recognized over a weighted-average remaining period of 2.27 years. PSU Activity — During the three months ended September 30, 2019, certain employees were granted PSUs with an aggregate target award of 297,789 shares of our common stock at a weighted average fair value of $1.36. The PSUs vest annually over four years from the grant date based on continuous service, with the number of shares earned dependent upon the Company's achievement of certain financial performance targets measured over the period from January 1, 2019 through December 31, 2022. The number of shares earned can range from 0% to 150% of the target award. As of September 30, 2019, total unrecognized compensation cost, adjusted for estimated forfeitures, related to PSU's was $0.3 million. This cost is expected to be recognized over a weighted-average remaining period of 3.26 years.
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Net (Loss) Income Per Common Share Data |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net (Loss) Income Per Common Share Data | Net Loss Per Common Share Data Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. The Company’s potential common shares consist of the incremental common shares issuable upon the exercise of stock options, warrants, and to a lesser extent, shares issuable upon the release of RSUs. The dilutive effect of these potential common shares is reflected in diluted earnings per share by application of the treasury stock method. The following securities were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:
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The Company and Summary of Significant Accounting Principles (Policies) |
9 Months Ended |
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Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation — The interim unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the interim unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position for the periods presented. These interim unaudited condensed consolidated financial statements are not necessarily indicative of the results expected for the full fiscal year or for any subsequent period. The accompanying condensed consolidated balance sheet as of December 31, 2018 was derived from the audited financial statements as of that date, but does not include all the information and footnotes required by U.S. GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
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Accounting Estimates | Accounting Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, actual results may differ from estimated amounts.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements — Not Yet Adopted In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2018-15, Customer’s Accounting For Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which aligns the requirements for capitalizing implementation costs in a cloud computing arrangement with the requirements for capitalizing implementation costs incurred for an internal-use software license. Adoption of this guidance is required for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years and early adoption is permitted. Entities are permitted to choose to adopt the new guidance (1) prospectively for eligible costs incurred on or after the date this guidance is first applied or (2) retrospectively. The Company is evaluating the impact of this new accounting standard on its financial statements. Recently Adopted On January 1, 2019 the Company adopted ASU No. 2016-2, Leases (Topic 842) (ASU 2016-2), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provides an additional, optional transition method with which to adopt the new leases standard. This additional transition method allows for a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, rather than in the earliest period presented in the financial statements, as originally required by ASU 2016-2. The Company adopted the standard using the additional transition method introduced by ASU 2018-11. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. For information regarding the impact of Topic 842 adoption, see Significant Accounting Policies - Leases and Note 3 — Leases. The Company considers the applicability and impact of all ASUs. ASUs not listed above were assessed and determined to be either not applicable, or had or are expected to have minimal impact on the Company’s financial statements and related disclosures. Significant Accounting Policies – Leases On January 1, 2019, the Company adopted Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating prior periods. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. The Company elected the package of practical expedients permitted under the transition guidance, which allowed for the carryforward of historical lease classification, on whether a contract was or contains a lease, and of the assessment of initial direct costs for any leases that existed prior to January 1, 2019. The Company also elected to combine lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term. On January 1, 2019, the Company recognized additional ROU assets of $10.2 million, with corresponding liabilities of $10.4 million on the condensed consolidated balance sheet. The difference between the lease liability and the ROU asset represents the existing deferred rent liabilities balances before adoption, resulting from historical straight-lining of rent expense, which was reclassified upon adoption to reduce the measurement of the initial ROU asset. This was in addition to the $3.4 million of finance lease ROU assets previously reported in property and equipment, net as capital leases. The adoption did not impact our beginning stockholders’ equity, and did not have a material impact on the condensed consolidated statement of operations and statement of cash flows for the three and nine months ended September 30, 2019. Under Topic 842, the Company determines if an arrangement is a lease and classifies that lease as either an operating or finance lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, only payments that are fixed and determinable at the time of commencement are considered. As many of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is a hypothetical rate based on factors including the Company’s credit rating. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the options will be exercised. Operating leases are included in operating lease right-of-use assets, and current and long-term operating lease liabilities on our condensed consolidated balance sheets. Finance leases are included in property and equipment-net, and on the current and long-term portion of debt and finance leases on our condensed consolidated balance sheets. Significant Accounting Policies – Goodwill and Segments During the first quarter of 2019, the Company made changes to its segment reporting structure that resulted in two reportable segments: 1) Software & Services and 2) Portal & Advertising. Previously the Company concluded that it had one reportable segment. This change resulted in two reporting units for the purpose of impairment analysis for goodwill. The Company evaluates goodwill for impairment for each of its reporting units at least annually, during the fourth quarter, and whenever events occur or circumstances change, such as changes in the business climate, poor indicators of operating performance or the sale or disposition of a significant portion of a reporting unit. The Company is required to evaluate goodwill for impairment when there is a change in reporting units. Companies may perform a qualitative assessment as the initial step in the annual goodwill impairment testing process for all or selected reporting units. Companies are also allowed to bypass the qualitative analysis and perform a quantitative analysis if desired. Economic uncertainties and the length of time from the calculation of a baseline fair value are factors that we consider in determining whether to perform a quantitative test. When the Company evaluates the potential for goodwill impairment using a qualitative assessment, the Company considers factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel and overall financial performance. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative two-step impairment test. Quantitative testing first requires a comparison of the fair value of each reporting unit to its carrying value. The fair value of each reporting unit is determined using a combination of an income approach and a market approach. If the carrying value of the reporting unit exceeds its fair value, goodwill is considered impaired and any loss must be measured. The income approach uses a discounted cash flow method to estimate the fair value of our reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating margins and cash flows, the terminal growth rate and the discount rate. The Company projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments and operational strategies typically over a five-year period. The market approach determines fair value based on available market pricing for comparable assets. Valuation multiples were calculated utilizing actual transaction prices and revenue or EBITDA data from target companies deemed similar to the reporting unit. Valuation multiples were then applied to certain operating statistics such as revenue or EBITDA, and an estimated control premium was applied. If the carrying amount of the reporting unit exceeds the reporting unit’s fair value as determined using the two valuation methodologies described above, an impairment loss is recognized in the amount by which the carrying value of the reporting unit exceeds the fair value of the reporting unit. The determination of our assumptions is subjective and requires significant estimates. Changes in these estimates and assumptions could materially affect the results of our reviews for impairment of goodwill.
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The Company and Summary of Significant Accounting Principles (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Concentrations Equal to or Exceeding 10% of Company's Accounts Receivable, Revenue, and Cost of Revenue | As of September 30, 2019 and December 31, 2018, the Company had concentrations equal to or exceeding 10% of the Company’s accounts receivable as follows:
For the three and nine months ended September 30, 2019 and 2018, the Company had concentrations equal to or exceeding 10% of the Company’s revenue as follows:
For the three and nine months ended September 30, 2019 and 2018, the following customers received revenue-share payments equal to or exceeding 10% of the Company’s cost of revenue:
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Revenue from Contracts with Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Timing of Revenue Recognition, Includes Reconciliation of Disaggregated Revenue by Reportable Segment | The following table provides information about disaggregated revenue for the three and nine months ended September 30, 2019 and 2018 by the timing of revenue recognition, and includes a reconciliation of the disaggregated revenue by reportable segment (in thousands):
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Summary of Revenue Disaggregated by Geography Areas | Revenue disaggregated by geography, based on the billing address of our customer, consists of the following (in thousands):
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Schedule of Contract with Customer, Asset and Liability | The changes in deferred revenue, inclusive of both current and long-term, are as follows (in thousands):
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Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Lease Costs, Lease Term and Discount Rate | The components of lease costs, lease term and discount rate are as follows (lease cost in thousands):
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Schedule of Maturities of Operating Leases Liabilities | The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2019 (in thousands):
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Schedule of Maturities of Finance Leases Liabilities | The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2019 (in thousands):
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Schedule of Operating Lease Commitments | As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and under Accounting Standard Codification Topic 840, the predecessor to Topic 842, the following is a summary of annual future minimum lease and rental commitments under noncancelable operating leases as of December 31, 2018 (in thousands):
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Schedule of Supplemental Cash Flow Leases | Supplemental cash flow information related to leases are as follows (in thousands):
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Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the nine months ended September 30, 2019 are as follows (in thousands):
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Schedule of Intangible Assets | Intangible assets consisted of the following (in thousands):
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Property and Equipment - Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment, net consisted of the following (in thousands):
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Schedule of Impaired Intangible Assets | Impairment charges related to the following assets were included in general and administrative expenses in the consolidated statement of operations for the three and nine months ended September 30, 2019 as follows (in thousands):
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Schedule of Long Lived Tangible Assets by Geographic Area | The following table sets forth long-lived tangible assets by geographic area (in thousands):
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Accrued Expenses and Other Current Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands):
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Summary of Activity in Accrued Severance Account | The below table summarizes the activity in the accrued severance account (in thousands).
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Information for Companies Reportable Segments | The tables below summarize the financial information for the Company’s reportable segments for the three and nine months ended September 30, 2019 and 2018 (in thousands). The “Corporate Unallocated Expenses” category, as it relates to Segment Adjusted EBITDA, primarily includes corporate overhead costs, such as rent, payroll and related benefit costs and professional services which are not directly attributable to any individual segment.
Notes: (1) Exclusive of depreciation and amortization shown separately on the condensed consolidated statements of operations
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Reconciliation of Total Segment Adjusted EBITDA to Net Loss | The following table reconciles total Segment Adjusted EBITDA to Net loss:
* "Certain legal expenses" include legal fees and other related expenses outside the ordinary course of business. ** “Certain professional services fees” includes fees and expenses related to merger and acquisition activities.
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Commitments and Contingencies Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Contract Commitments | Contract commitments as of September 30, 2019 are as follows (in thousands):
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Stock-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Assumptions Used to Estimate the Fair Value of Options Granted | The following table presents the weighted-average assumptions used to estimate the fair value of options granted during the periods indicated:
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Schedule of Total Stock Based Compensation Expense | Total stock-based compensation expense included in the accompanying condensed consolidated statements of operations for the periods presented, is as follows (in thousands):
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Summary of Stock Option Activity | Stock Option Activity – A summary of the stock option activity for the nine months ended September 30, 2019 is presented below:
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Summary of RSU Activity | RSU Activity —A summary of RSU activity for the nine months ended September 30, 2019 is as follows:
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Net (Loss) Income Per Common Share Data (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Securities Excluded from Calculation of Diluted Net Loss Per Share | The following securities were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:
|
The Company and Summary of Significant Accounting Principles - Basis of Presentation - Additional Information (Detail) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Mar. 31, 2019
Segment
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2019
Segment
|
Sep. 30, 2018
USD ($)
|
Dec. 31, 2018
Segment
|
|
Summary Of Significant Accounting Principles [Line Items] | |||||
Number of reporting segments | Segment | 2 | 2 | 1 | ||
Restatement Adjustment | |||||
Summary Of Significant Accounting Principles [Line Items] | |||||
Cost of Revenue | $ | $ 0.1 | $ 0.7 |
The Company and Summary of Significant Accounting Principles - Recently Adopted - Additional Information (Detail) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Mar. 31, 2019
Segment
|
Sep. 30, 2019
USD ($)
Segment
|
Dec. 31, 2018
USD ($)
Segment
|
Jan. 01, 2019
USD ($)
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Right-of-use assets, operating lease | $ 5,567 | $ 0 | $ 10,200 | |
Lease liability, operating lease | $ 5,753 | 10,400 | ||
Right-of-use asset, finance lease | $ 3,400 | |||
Number of reporting segments | Segment | 2 | 2 | 1 | |
Number of reporting units | Segment | 2 |
Revenue from Contracts with Customers - Additional Information (Detail) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, performance obligation, description of timing | The Company usually expects payment within 30 to 90 days from the invoice date (fulfillment of performance obligations or per contract terms). |
Revenue from Contracts with Customers - Schedule of Contract with Customer, Asset and Liability (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 31,366 | $ 35,643 | $ 95,039 | $ 104,481 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 25,717 | 29,193 | 78,965 | 85,585 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 5,649 | $ 6,450 | $ 16,074 | $ 18,896 |
Revenue from Contracts with Customers - Schedule of Changes in Deferred Revenue, Inclusive of Both Current and Long-term (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Movement in Deferred Revenue [Roll Forward] | |
Beginning balance - January 1, 2019 | $ 8,886 |
Recognition of deferred revenue | (8,908) |
Deferral of revenue | 8,792 |
Effect of foreign currency translation | (135) |
Ending balance - September 30, 2019 | $ 8,635 |
Revenue from Contracts with Customers - Remaining Performance Obligations - Additional Information (Detail) |
Sep. 30, 2019 |
---|---|
Maintenance and Support Contracts for Email Software Licenses | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Leases - Schedule of Components of Lease Costs, Lease Term and Discount Rate (Detail) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019
USD ($)
|
Sep. 30, 2019
USD ($)
|
|
Leases [Abstract] | ||
Amortization of right-of-use assets | $ 990 | $ 2,576 |
Interest | 197 | 597 |
Operating lease cost | 1,067 | 3,283 |
Total lease cost | $ 2,254 | $ 6,456 |
Weighted average remaining lease term, operating leases | 2 years 1 month 6 days | 2 years 1 month 6 days |
Weighted average remaining lease term, finance leases | 1 year 4 months 24 days | 1 year 4 months 24 days |
Weighted average discount rate, operating leases | 6.00% | 6.00% |
Weighted average discount rate, finance leases | 5.20% | 5.20% |
Leases - Schedule of Maturities of Operating and Finance Leases Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jan. 01, 2019 |
---|---|---|
Operating Leases | ||
The remainder of 2019 | $ 835 | |
2020 | 2,389 | |
2021 | 1,614 | |
2022 | 943 | |
2023 | 448 | |
2024 | 36 | |
Total undiscounted cash flows | 6,265 | |
Less imputed interest | (512) | |
Present value of lease liabilities | 5,753 | $ 10,400 |
Finance Leases | ||
The remainder of 2019 | 1,192 | |
2020 | 2,707 | |
2021 | 530 | |
2022 | 226 | |
2023 | 0 | |
2024 | 0 | |
Total undiscounted cash flows | 4,655 | |
Less imputed interest | (390) | |
Present value of lease liabilities | $ 4,265 |
Leases - Schedule of Operating Lease Commitments (Detail) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 5,276 |
2020 | 3,101 |
2021 | 1,594 |
2022 | 782 |
2023 | 250 |
2024 | 33 |
Total lease commitments | $ 11,036 |
Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 3,388 |
Operating cash flows from finance leases | 597 |
Financing cash flows from finance leases | 2,576 |
Lease liabilities arising from obtaining right-of-use-assets: | |
Operating leases | 175 |
Finance leases | $ 3,141 |
Goodwill and Intangible Assets - Schedule of Changes in the Carrying Amount of Goodwill (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Balance, beginning of year | $ 15,941 |
Effect of foreign currency translation | 4 |
Balance, end of year | 15,945 |
Software & Services | |
Goodwill [Roll Forward] | |
Balance, beginning of year | 11,318 |
Effect of foreign currency translation | 4 |
Balance, end of year | 11,322 |
Portal & Advertising | |
Goodwill [Roll Forward] | |
Balance, beginning of year | 4,623 |
Effect of foreign currency translation | 0 |
Balance, end of year | $ 4,623 |
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill impairment losses | $ 0 | $ 0 | ||
Accumulated impairment losses | 0 | 0 | ||
Amortization of intangible assets | 500,000 | $ 500,000 | 1,600,000 | $ 1,600,000 |
Amortization of intangible assets for the remainder of 2019 | 500,000 | 500,000 | ||
Amortizable intangible assets 2020 | 2,000,000.0 | 2,000,000.0 | ||
Amortizable intangible assets 2021 | 1,400,000 | 1,400,000 | ||
Amortizable intangible assets 2022 | 1,300,000 | 1,300,000 | ||
Amortizable intangible assets 2023 | $ 1,300,000 | $ 1,300,000 |
Goodwill and Intangible Assets - Schedule of Intangible Assets (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Total gross amortizable intangible assets | $ 17,410 | $ 17,410 |
Less accumulated amortization | (8,464) | (6,857) |
Intangible assets, net | 8,946 | 10,553 |
Customer and publisher relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total gross amortizable intangible assets | 14,780 | 14,780 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total gross amortizable intangible assets | 2,330 | 2,330 |
Trademark | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total gross amortizable intangible assets | $ 300 | $ 300 |
Property and Equipment - Net - Schedule of Property and Equipment (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 64,172 | $ 62,353 |
Less accumulated depreciation | (47,770) | (43,646) |
Property and equipment, net | 16,402 | 18,707 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 30,634 | 27,294 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 30,302 | 27,422 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,493 | 1,618 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,115 | 1,256 |
Work in process (primarily software development costs) | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 449 | 4,584 |
Other | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 179 | $ 179 |
Property, Plant, and Equipment - Schedule of Impairment Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Property, Plant and Equipment [Line Items] | ||||
Impairment charges | $ 1,525 | $ 0 | $ 1,751 | $ 0 |
Computer equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment charges | 2 | 2 | ||
Computer software | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment charges | 1,331 | 1,557 | ||
Furniture and fixtures | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment charges | 102 | 102 | ||
Leasehold improvements | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment charges | $ 90 | $ 90 |
Property and Equipment - Net - Schedule of Long Lived Tangible Assets by Geographic Area (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived tangible assets | $ 16,402 | $ 18,707 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived tangible assets | 16,031 | 18,217 |
International | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total long-lived tangible assets | $ 371 | $ 490 |
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts Payable and Accrued Liabilities, Current [Abstract] | ||
Accrued compensation | $ 5,549 | $ 5,801 |
Accrued content fees and other costs of revenue | 305 | 342 |
Accrued taxes | 240 | 206 |
Other | 1,062 | 1,500 |
Total | $ 7,156 | $ 7,849 |
Accrued Expenses and Other Current Liabilities - Summary of Activity in Accrued Severance Account (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Balance at January 1, 2019 | $ 274 |
Charged to expense | 691 |
Cash payments | (259) |
Balance at September 30, 2019 | $ 706 |
Segment Information - Additional Information (Detail) - Segment |
3 Months Ended | 9 Months Ended | 12 Months Ended |
---|---|---|---|
Mar. 31, 2019 |
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Segment Reporting [Abstract] | |||
Number of reporting segments | 2 | 2 | 1 |
Segment Information - Reconciliation of Total Segment Adjusted EBITDA to Net Loss (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Segment Reporting [Abstract] | ||||
Total Segment Adjusted EBITDA | $ 2,740 | $ 2,654 | $ 6,059 | $ 4,412 |
Provision for income taxes | (207) | (165) | (757) | (478) |
Interest expense | (80) | (80) | (199) | (265) |
Other income (expense), net | (101) | 32 | (110) | 14 |
Depreciation and amortization | 3,036 | 2,437 | 8,509 | 7,316 |
Asset impairment | (1,525) | 0 | (1,751) | 0 |
Stock-based compensation expense | (529) | (361) | (1,184) | (1,451) |
Restructuring Costs | (819) | (766) | (819) | (1,034) |
Certain legal expenses | (282) | (1,033) | (805) | (1,033) |
Certain professional services fees | (88) | 0 | (601) | 0 |
NET LOSS | $ (3,725) | $ (2,220) | $ (8,456) | $ (7,179) |
Commitments and Contingencies Commitments and Contingencies - Contract Commitments (Details) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Other commitments, due in first year | $ 225 |
Other commitment, due in second year | 753 |
Other commitment | $ 978 |
Stock-based Compensation - Schedule of Weighted-Average Assumptions Used to Estimate the Fair Value of Options Granted (Detail) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Share-based Payment Arrangement [Abstract] | ||
Weighted average grant date fair value | $ 0.98 | $ 1.01 |
Expected dividend yield | 0.00% | 0.00% |
Expected stock price volatility | 66.00% | 48.00% |
Risk-free interest rate | 2.30% | 2.70% |
Expected life of options (in years) | 5 years 11 months 12 days | 6 years 3 months |
Stock-based Compensation - Schedule of Total Stock Based Compensation Expense (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 529 | $ 361 | $ 1,184 | $ 1,451 |
Technology and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 103 | 101 | 298 | 369 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 149 | 110 | 375 | 374 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 277 | $ 150 | $ 511 | $ 708 |
Stock-based Compensation - Summary of RSU Activity (Detail) - RSU |
9 Months Ended |
---|---|
Sep. 30, 2019
$ / shares
shares
| |
Number of Shares | |
Unvested-Beginning Balance (in shares) | shares | 11,346 |
Granted (in shares) | shares | 845,361 |
Released (in shares) | shares | (73,815) |
Forfeited (in shares) | shares | (8,500) |
Unvested-Ending Balance (in shares) | shares | 774,392 |
Weighted Average Fair Value | |
Unvested-Beginning Balance (in dollars per share) | $ / shares | $ 3.60 |
Granted (in dollars per share) | $ / shares | 1.56 |
Released (in dollars per share) | $ / shares | 2.04 |
Forfeited (in dollars per share) | $ / shares | 1.76 |
Unvested-Ending Balance (in dollars per share) | $ / shares | $ 1.54 |
Net (Loss) Income Per Common Share Data - Schedule of Securities Excluded from Calculation of Diluted Net Loss Per Share (Detail) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive equity awards (in shares) | 7,622,972 | 8,214,370 | 7,617,538 | 8,214,370 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive equity awards (in shares) | 578,150 | 21,846 | 390,519 | 21,846 |
Performance based stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive equity awards (in shares) | 148,895 | 0 | 74,447 | 0 |
Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive equity awards (in shares) | 0 | 495,652 | 0 | 564,835 |